Byline Bancorp's (NYSE:BY) Dividend Will Be $0.09

The board of Byline Bancorp, Inc. (NYSE:BY) has announced that it will pay a dividend of $0.09 per share on the 21st of November. The dividend yield is 1.9% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Byline Bancorp

Byline Bancorp's Payment Expected To Have Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end.

Having paid out dividends for only 4 years, Byline Bancorp does not have much of a history being a dividend paying company. While it has a shorter history of paying out dividends, Byline Bancorp's payout ratio of 14% is a great sign for current shareholders, as this means that earnings greatly cover dividends.

The next 3 years are set to see EPS grow by 0.5%. The future payout ratio could be 16% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Byline Bancorp Doesn't Have A Long Payment History

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The annual payment during the last 4 years was $0.12 in 2019, and the most recent fiscal year payment was $0.36. This implies that the company grew its distributions at a yearly rate of about 32% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Byline Bancorp has impressed us by growing EPS at 26% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We should note that Byline Bancorp has issued stock equal to 17% of shares outstanding. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.

We Really Like Byline Bancorp's Dividend

Overall, we like to see the dividend staying consistent, and we think Byline Bancorp might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Byline Bancorp that investors should take into consideration. Is Byline Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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